EUROPEAN EQUITIES UPDATE: European stocks benefit from geopolitical optimism

STOXX 600: +0.5%

• European bourses opened firmer, and are attempting to build on gains, benefiting from the positive mood surrounding geopolitical optimism.


• On the latter, US President Trump indicated that a decision on a potential strike against Iran would come within two weeks, somewhat easing immediate fears; the White House also noted the prospects for negotiations with Iran, while a Middle East Eye correspondent on Friday, reported that US Secretary of State Rubio told his French counterpart that the US is ready for direct contact with the Iranians at any time.


• Traders will be looking to today's meeting between Iran's Foreign Minister and E3 officials in Geneva, where the Europeans aim for a diplomatic solution amid the escalating Israel-Iran conflict, with an expected focus on Nuclear talks.


• Separately, US President Trump will attend a national security meeting today (11:00EST/16:00BST).


• Elsewhere on today's docket, reports note that investors face USD 6.5tln of US options expiring on Friday, which could increase market volatility; Bloomberg suggests that while no sharp moves are expected, the event may trigger more sudden stock swings next week after a period of subdued changes.


• Bloomberg Poll, Indices at end-2025: Euro Stoxx 50 seen at 5,439 (last 5,197.03); DAX 40 seen at 23,488 (last 23,057.38); FTSE 100 8,773 (last 8,791.80)

Sectors: Positive

• Sectors are almost entirely in the green, the breadth of the market relatively contained, with Energy (-0.4%) the sole loser, due to lower oil prices - travel and leisure benefits.


• Banking stocks lead the charge, buoyed by fresh EU developments that see the European Investment Bank's annual lending ceiling raised to EUR 100bln. Notably, the plan includes a threefold increase in spending on security and defence, now set at EUR 3.5bln. As such, Technology (+1.2%) and Industrials (+0.8%) are also towards the top.

Stories:

• Marks & Spencer -0.8%: UK retail sales declined by -2.7% M/M in May (exp. -0.5%) -- the first drop this year, and the biggest monthly decline since December. Analysts suggest that it signals potential weakness in the UK economy in Q2.


• Berkeley -7.0%: Revenue inline but saw a dip in profit, announced leadership change.


• Hiscox +1.4%: Upgraded at Barclays


• Eutelsat +15.5%: To increase capital by EUR 1.35bln, and the French State to subscribe to half.


• STMicroelectronics +1.8%, ASML +1.5%: EIB plans to invest EUR 70bln in European tech firms from 2025-2027.

US Equity Futures: -ES -0.2, NQ -0.2, RTY -0.3%

• US futures find themselves marginally in the red, though this is more a function of a slight retreat from the gap-higher seen at the recommencement of trade from Thursday’s holiday as the benchmark digested geopolitical developments, rather than any bearish driver.


• As it stands, ES comfortably above the 6k mark and in relative proximity to the overnight 6038 peak.


• Ahead, we are expecting the US Philly Fed Business Index, Leading Index Change, Canadian Producer Prices & Retail sales, and Quad Witching.

20 Jun 2025 - 10:10- ForexGeopolitical- Source: Newsquawk